• Key point: The individual members of an unincorporated church can be personally liable for the actions of other members as well as for the obligations of the church.
• A Connecticut appeals court affirmed the well-established rule that individual members of an unincorporated association can be sued personally as a result of negligence or other misconduct of fellow members. The court observed: “Persons who associate together for some common nonbusiness purpose without a corporate franchise from the state are merely an aggregation of individuals, not a separate legal entity …. A voluntary association for tort liability purposes remains an aggregation of individuals who may be held personally liable in tort for certain of its activities.” The court based this conclusion both on a state statute and court decisions:
Section 52-76 [of the Connecticut Statutes] permits … civil actions to be brought both in contract and in tort against an association and its members. It is therefore clear from the words of this statute that a civil action may be brought against members of an unincorporated voluntary association in addition to the association itself. It is also clear from case law that not only are members of an unincorporated association suable, they are also liable individually …. Passage of [section 52-76] permitting an unincorporated voluntary association to sue or be sued in its own name, which also still permitted civil actions to be brought against its members, did not convert associations into separate quasi corporate entities distinct from their members.
The lesson of this case (and many others like it) is clear—churches that are not incorporated subject their members to personal liability for the actions of other members and for the obligations of the church itself. Unfortunately, many church leaders do not know whether or not their church is incorporated, and others erroneously assume that their church is incorporated. Our recommendations:
- Churches can simply and easily protect their members from personal liability for the actions of other members by incorporating the church. While incorporation will not protect a member from liability for his or her own actions, it will protect other members who did not participate in those actions.
- Incorporation is a simple and relatively inexpensive process. Of course, it requires the assistance of an attorney. Unfortunately, many church leaders do not know if their church is incorporated. Many assume that it is. This can be a very dangerous assumption if in fact the church is not incorporated, since it may mean that the members are personally responsible for the liabilities of the church. It is essential for church leaders to confirm whether or not their church is incorporated. This easily can be done by contacting the office of the secretary of state in your state capital. Representatives of the office of secretary of state ordinarily will tell you over the telephone whether or not your church is incorporated. If you are informed that your church is incorporated, then you may wish to ask for a certificate of good standing (the name of this document varies somewhat from state to state) that confirms the corporate status of your church. You also should request a certified copy of your charter (article of incorporation), to be sure that you have a copy of the document on file with the state.
- Calling the office of the secretary of state is important even if you think that your church is incorporated, since the corporate status of many churches has “lapsed” through failure to file annual reports with the state. In many states, church corporations must file relatively simple annual reports with the state. In a surprisingly large number of cases, churches do not file these reports. In some states, the failure to file these reports will cause the church’s corporate status to lapse. This can lead to very unpleasant consequences. Church leaders and members alike have assumed that the corporate status protects them against personal liability for the obligations of the church, and then a lawsuit is filed naming them all as defendants. A search of the record then reveals that the corporate status lapsed, and the members indeed may be personally liable. Accordingly, it is an excellent and recommended practice for churches to confirm each year with the office of their secretary of state that they are in fact a corporation in good standing. This will take only a few minutes. If you are informed that your church is a corporation in good standing, then you may wish to request a certificate of good standing each year to remove any doubt. Such a certificate can be obtained from the office of the secretary of state for a nominal fee.
- A small number of church leaders are opposed to incorporation on the basis of theological considerations. Note that theological opposition to incorporation will not be a defense to the personal liability of church members for the obligations of an unincorporated church. Church leaders who are opposed to incorporation on theological grounds should share their position with the church membership. After all, it is entirely possible that the church members will not share this theological position when they are apprised of the potential consequences. Hartford Accident and Indemnity Company v. Sena, 619 A.2d 489 (Conn. Super. 1992).
See Also: Unincorporated Associations – In General
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